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Sources of household income

The National Income and Product Accounts (NIPA) provide a wealth of economic insights by separating data into different classes, one of them being households. FRED makes it especially easy to examine the sources of household income by providing release tables. Here, we used the table for personal income to create the graph above.

Probably to no one’s surprise, wages and salaries make up the largest share of household income. But this share has been steadily shrinking, from 63% in 1947 to 49% today. Proprietors’ income (the income of the self-employed) has also shrunk, from 19% down to 9%.

Obviously, other shares must be growing. Capital income has grown from 8% to 14%. Supplements to wages and salaries (benefits for health, retirement, vacation, etc.) have grown from 5% to 12%. And transfers from the government have grown the most, from 5% to 17%.

How this graph was created: From the Personal Income release table, select these five series and click “Add to Graph.” In the “Edit Graph” tab, go to the “Format” tab to select graph type “Area” and stacking type “Percent.” FYI: FRED lets you change the order of the series as you wish. [NOTE: This stacked area graph displays each of the series as a percent of the total of all five series shown here. The original units of the series are billions of dollars.]

Suggested by Christian Zimmermann.

View on FRED, series used in this post: A038RC1Q027SBEA, A577RC1Q027SBEA, PROPINC, W210RC1Q027SBEA, WASCUR

Government transfers to households: From 1947 to 1966 to now

One thing governments do is redistribute wealth from some citizens to others. Some of these transfers are explicitly captured in the system of national accounts, and the graph includes the five largest categories. It’s striking how the composition of these transfers has changed. The data start in 1947, so it’s no surprise the support of WWII veterans took the lion’s share for the first years. The number of veterans eligible for benefits declined as social security progressively expanded. In 1966, Medicaid and Medicare were introduced, and we see their shares slowly increasing. Today, social security benefits claim the largest share of government transfers: 40%. Medicare claims 29%,  Medicaid claims 25%, unemployment insurance benefits claim 1%, and veterans’ benefits claim 4%.

How this graph was created: These national accounts data can be found in the personal income release table. Check these five series and click on “Add to Graph.” From the “Edit Graph” panel, go to the “Format” tab to choose “Area” as the type of graph and “Percent” as the type of stacking for the graph. [NOTE: This stacked area graph displays each of the series as a percent of the total of all five series shown here. As the y-axis label indicates, the original units of the series are billions of dollars.]

Suggested by Christian Zimmermann.

View on FRED, series used in this post: W729RC1Q027SBEA, W823RC1Q027SBEA, W824RC1Q027SBEA, W825RC1Q027SBEA, W826RC1Q027SBEA

Friction in oil markets

The graph shows the price of a barrel of oil. Two types, to be exact: The blue line shows West Texas Intermediate (WTI) quality oil at delivery in Cushing, Oklahoma, a significant pipeline hub. The red line shows oil from the North Sea, referred to as Brent Crude. The two lines are typically very close to each other, with Brent being about $3 cheaper because of its slightly different characteristics and transportation costs. But things change for the years 2011 to 2014: WTI is much cheaper—up to $26 cheaper. What happened? Many factors may have contributed to this phenomenon, the most likely being the increased extraction of tar sands in Alberta, Canada, and a boom in oil extraction through fracking in the interior U.S. This glut overwhelmed the transport infrastructure and made it difficult to move all this oil to destination. Once more pipelines came online and the railroad transport toward the East Coast expanded, the price differential returned to normal, with relatively frictionless arbitrage between the various oil types and thus similar prices. This means that the different blends can be traded on the market as close substitutes while being easily accessible, and this makes their prices converge toward each other.

How this graph was created: Search for “crude oil price,” select the two series, and click on “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: DCOILBRENTEU, DCOILWTICO


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